There's a few things about the mortgage crisis and bailout people either lose track of or don't understand:

- The three idots act (Gramm-Leitch=Bliely)repealed Glass-Steagall Act of 1933, Clinton of all people signed that into Law - It was pushed by Republicans in both chambers and had some Democrat support as well in the house, senate democrats tried to block it and warned against bailouts and TBTF - Looong before those things actually happened
- This resulted in DEREGULATION which allowed the banks to go hog-wild in the derivatives market with MBSs, CDSs, and gawd knows what else - Result subprime crisis
- The CRA of 1977 had little or nothing to do with the crisis - 50% of subprime loans were made by non bank lenders, and additional 30% by smaller banks niether of which were even remotely affected by the CRA
- Even with a partial run on banks a lot of Money Market funds had "broken the buck" - letting that continue would have been disastrous and led to total panic
- Without the bailout the system would have completely collapsed - Total complete utter meltdown
- The bailout WORKED - it acheived it's primary objective - Saving us from unmitigated disaster
- The Banks didn't want the money - some them were strong armed by Paulson & Co into taking the bailout
- The governmnet didn't throw away money - they got it back and actually made money
- Paulson FAILED to put restrictions on how the money could be used - THIS WAS THE BIGGEST ISSUE WITH THE BAILOUT
- The banks took the money, wrote off toxic assets at cents on he dollar, then bought them back at much lower price and repackaged and SOLD THEM AGAIN - Banks made a TON of money from the bailout
- Other banks bought treasuries which still paid higher interest rates with the money, and they just ate the margin
- The bailout money was SUPPOSED to have been put back into the economy by the banks to promote job growth instead they sat on it and used it to trade in the same assets multiple times to make even more money for themselves - This was made possible Paulson's shortsightedness - RESULT - NO JOB GROWTH

It is not a function of how much money was thrown into the bailout, the jobs creation didn't happen because of how it was handed over with no constraints or restrictions

loweyecue wrote:Knickshot - thanks for the video link. Have you watched the movie "Too Big To Fail"? It's also pretty well done. http://www.hbo.com/movies/too-big-to-fail/index.html

There's a few things about the mortgage crisis and bailout people either lose track of or don't understand:

- The three idots act (Gramm-Leitch=Bliely)repealed Glass-Steagall Act of 1933, Clinton of all people signed that into Law - It was pushed by Republicans in both chambers and had some Democrat support as well in the house, senate democrats tried to block it and warned against bailouts and TBTF - Looong before those things actually happened
- This resulted in DEREGULATION which allowed the banks to go hog-wild in the derivatives market with MBSs, CDSs, and gawd knows what else - Result subprime crisis
- The CRA of 1977 had little or nothing to do with the crisis - 50% of subprime loans were made by non bank lenders, and additional 30% by smaller banks niether of which were even remotely affected by the CRA
- Even with a partial run on banks a lot of Money Market funds had "broken the buck" - letting that continue would have been disastrous and led to total panic
- Without the bailout the system would have completely collapsed - Total complete utter meltdown
- The bailout WORKED - it acheived it's primary objective - Saving us from unmitigated disaster
- The Banks didn't want the money - some them were strong armed by Paulson & Co into taking the bailout
- The governmnet didn't throw away money - they got it back and actually made money
- Paulson FAILED to put restrictions on how the money could be used - THIS WAS THE BIGGEST ISSUE WITH THE BAILOUT
- The banks took the money, wrote off toxic assets at cents on he dollar, then bought them back at much lower price and repackaged and SOLD THEM AGAIN - Banks made a TON of money from the bailout
- Other banks bought treasuries which still paid higher interest rates with the money, and they just ate the margin
- The bailout money was SUPPOSED to have been put back into the economy by the banks to promote job growth instead they sat on it and used it to trade in the same assets multiple times to make even more money for themselves - This was made possible Paulson's shortsightedness - RESULT - NO JOB GROWTH

It is not a function of how much money was thrown into the bailout, the jobs creation didn't happen because of how it was handed over with no constraints or restrictions

No. I have not seen that but I will certainly watch it. Thanks.

You make good points about how the money was spent. I don't know if the banks violated an agreement, or if Paulson was just shortsighted. I am also not sure if the banks would have taken the deal with these restrictions. Banks had to recover a lot of dead loans that consumers negotiated for cents on the dollar or loans that foreclosed that were worthless. Heck - Citi was taking 10 cents on the dollar for second and third position loans.

There are many that agree with your point of the repeal of Glass–Steagall was a contributor to the collapse while many believe that without the repeal, the collapse was a sure thing. I am mixed on it since I think there have been both negative and positive effects.

Paulson and team certainly rescued us from sure collapse - we might have all been desolate and begging in the streets - its no joke.

Greed is inevitable in the financial industry and deregulation has certainly contributed to the insanity in this sector.

While the bailout was not perfect, can you imagine what would have been if the government allowed the collapse? [shudder]

Now, the banks have made it practically impossible to secure loans - one extreme to the other.

I don't thing anyone thought for a second that the banks would procure any funds to create jobs. The Financial industry was giving bonuses > 100% post bailout - does that make any sense? It does to them.

TymeLessKnicks wrote:Only after leaving the United States, do you truly realize how much is wrong in the United States.

Presidential campaigns are more of a publicity stunt, fashion show, movie, popularity contest. Facebook, Twitter, TV Ads.

I believe Americans need an education in world economics. Does the country provide you with all the securities you need? are your taxes being used to better your life?

Those are among the many questions that should be asked and are not being asked.

loweyecue wrote:Briggs and others. I understand your frustration with not expanding the bailout to induce more job creation and the last part of my response above was geared towards explaining why it wouldn't have worked. The banks were under no obligation to increase liquidity - it was what the Fed and Paulson assumed they would do and the banks definitely did NOT oblige.

IMO, Paulson was in the position to have required the banks to spend the money in a certain way - they couldn't walk away and not take the money because they would look like banks the Govt thought unworthy of bailing out which is almost a guaranteed execution sentence.

Knickshot - Glass- Stegall had ensured that RETAIL banks stayed separate from INVESTMENT banks. If the crisis had unfolded w/o it being repealed banks like BofA, CITI and Wachovia would not have billions in toxic derivatives on their books. The larger banks actually made very FEW bad subprime loans as well. They purchased a lot more as investments and took ridiculous positions on derivatives couldnt have done that w/o repeal of GSA. In that case the whole nature of the confidence issue would be different. If retail banking giants were left unscathed, there would not be as much panic on main street. Wall street and the stock market would still be taken to the cleaners but we could potentially withstand a few of the big INVESTMENT banks going OOB and a market collapse if the retail sector was operational and unaffected. The TSA (three stooges act - I referred to earlier) internationally changed all that. Retail banks merged, acquired investment banks and loaded up on toxic waste. This IMO is why we had a meltdown of this magnitude.

Very enlightening. You've encouraged me to now go back and read about GSA.

Are you in the financial or mortgage industry? You seem pretty knowledgeable on this subject.

loweyecue wrote:

mrKnickShot wrote:

loweyecue wrote:Briggs and others. I understand your frustration with not expanding the bailout to induce more job creation and the last part of my response above was geared towards explaining why it wouldn't have worked. The banks were under no obligation to increase liquidity - it was what the Fed and Paulson assumed they would do and the banks definitely did NOT oblige.

IMO, Paulson was in the position to have required the banks to spend the money in a certain way - they couldn't walk away and not take the money because they would look like banks the Govt thought unworthy of bailing out which is almost a guaranteed execution sentence.

Knickshot - Glass- Stegall had ensured that RETAIL banks stayed separate from INVESTMENT banks. If the crisis had unfolded w/o it being repealed banks like BofA, CITI and Wachovia would not have billions in toxic derivatives on their books. The larger banks actually made very FEW bad subprime loans as well. They purchased a lot more as investments and took ridiculous positions on derivatives couldnt have done that w/o repeal of GSA. In that case the whole nature of the confidence issue would be different. If retail banking giants were left unscathed, there would not be as much panic on main street. Wall street and the stock market would still be taken to the cleaners but we could potentially withstand a few of the big INVESTMENT banks going OOB and a market collapse if the retail sector was operational and unaffected. The TSA (three stooges act - I referred to earlier) internationally changed all that. Retail banks merged, acquired investment banks and loaded up on toxic waste. This IMO is why we had a meltdown of this magnitude.

Very enlightening. You've encouraged me to now go back and read about GSA.

Are you in the financial or mortgage industry? You seem pretty knowledgeable on this subject.

I am not a Finance person, but I follow it closely. And I was working at Fidelity Investments when this whole fiasco happened. I currently work in manufacturing, but I report to a guy who was an SVP in a retail bank that was one of the casualties of this meltdown. So I have gleaned a lot of details from him that didn't necessarily make it to the papers.

Glass Stegall had to be repealed in the new financial environment...It was the right thing to do at the time...The environment back in the 1990s was that most financial business was beginning to be done by overseas banking conglomerates like UBS, Swiss Bank, Deutch Bank, Credit Suisse, etc., that didn't have the restrictions of Glass Stegall...U.S. banks simply were not competitive...Most of the big trading houses started doing their business with these big houses overseas because it was easier, one stop shopping, if you will...Huge sums of money was being lost to these institutions...Before the financial meltdown, I think the number was close to 40% of NYC revenues came from tax receipts of the financial industry...Think about that...Where the problem really came in is the SEC was not and is not capable of keeping up with the sophistication of new financial instruments...Guys on Wall Street was just swinging for the fences with no one to rein them in because not even their bosses understood how some of these instruments actually worked, they were so geeked by the massive profits...So there is a huge gap between re-instating Glass-Stegall and actually having a reliable, competent, institution to monitor and govern these new financial instruments...It's not a one size fits all scenario...

So you are putting your money in a savings account the bank is using it for risky investments. The bank makes money - it pays millions to it's CEOs you don't get jack. The bank loses money they thumb their nose at you and the Govt has to make you whole. The way the govt does that is by "BORROWING" money through issuing treasuries, which means you and I are again on the hook to have see our future work effort go into paying off that treasury debt. The TSA ensure that either the bankers would make millions else the common people are left holding the bag. This isn't that complicated.

The essence of Glass Steagall which led to the creation of the FDIC itself was to prevent exactly this problem from happening. It's called a moral hazard.

holfresh wrote:

loweyecue wrote:Also a repeal of a long standing law can lead to unintended consequences that will not be seen in places where the law never existed. The whole Euro bank argument is pointless. Most of the Euro mega banks had he exact same problems. The law was written to give investment banker's access to money regular blokes like you and me put into their savings account. As a result of the Three Stooges Act the banks can now take your savings money and bet on ultra risky derivatives and lose all of it with complete legal impunity. And guess who is on the hook to backstop their completely unchecked and callous risk taking? That would be the US Govt thru the FDIC gurantee.

So you are putting your money in a savings account the bank is using it for risky investments. The bank makes money - it pays millions to it's CEOs you don't get jack. The bank loses money they thumb their nose at you and the Govt has to make you whole. The way the govt does that is by "BORROWING" money through issuing treasuries, which means you and I are again on the hook to have see our future work effort go into paying off that treasury debt. The TSA ensure that either the bankers would make millions else the common people are left holding the bag. This isn't that complicated.

The essence of Glass Steagall which led to the creation of the FDIC itself was to prevent exactly this problem from happening. It's called a moral hazard.

That argument isn't pointless because that is the reason and argument at the time for the repeal...The law wasn't written so Investment Bankers had access to your account because they had access to it even during Glass Stegall...What Glass Stegall did was to stop the retail banker from trading securities, there were lots of other asset classes being traded that aren't securitized...

Any argument used to perpetrate a scam is pointless. I am no expert but per my understanding Investment Bankers NEVER had access to money in my Savings account prior to repeal of Glass Steagall. Retail Bankers could NOT invest on anything that was speculative. They were limited mainly to using that money to lend in the form of loans. You can dispute that, and we will have to agree to disagree.

After the enactment of Glass-Steagall, commercial banks could accept depositor's money and make loans but could not become involved in selling or trading securities or underwriting. They certainly could not trade in risky or speculative financial instruments

Although the rule is scheduled to take effect in July, 2012, it remains both riddled with exceptions and under attack from banking and investment lobbyists. The Huffington Post article includes a helpful slide show of Mr. Dimon’s ongoing anti-regulation and anti-Volker rule statements. It should be noted that these kinds of risky trades were originally outlawed following the Great Depression by the Glass Steagall Act in 1933. A law written to limit speculation in the banking industry after the Wall Street Crash. The Glass Steagall act remained in effect until it was repealed by the Gramm-Leach-Bliley Act in 1999 which was crafted by Republican Senator Phil Gramm and signed into law by President Bill Clinton. Many attribute the banking collapse to passing of this legislation

You are arguing a technicality, which only changes the TIMING of when the repeal happened. It can be argued that the FED started the repeal in 1990 and the TSA finished the job. Not sure what that proves or why I would give a damn, which I don't.

I'll tell you something if Romney wins despite pros or cons the country will be in trouble as far as Government direction which
alot is based on downward to internal policies, foreign & external affairs for the country right or wrong.

That's all I'll tell ya and I dont even work for govt anymore havent for at least 13 yrs
*write it

loweyecue wrote:
Yeah I am wrong because you say so. Right, glad we settled that one then!

After the enactment of Glass-Steagall, commercial banks could accept depositor's money and make loans but could not become involved in selling or trading securities or underwriting. They certainly could not trade in risky or speculative financial instruments

http://bizfinance.about.com/od/smallbusinessissues/a/Glass-Steagall-Act.htm

Although the rule is scheduled to take effect in July, 2012, it remains both riddled with exceptions and under attack from banking and investment lobbyists. The Huffington Post article includes a helpful slide show of Mr. Dimon’s ongoing anti-regulation and anti-Volker rule statements. It should be noted that these kinds of risky trades were originally outlawed following the Great Depression by the Glass Steagall Act in 1933. A law written to limit speculation in the banking industry after the Wall Street Crash. The Glass Steagall act remained in effect until it was repealed by the Gramm-Leach-Bliley Act in 1999 which was crafted by Republican Senator Phil Gramm and signed into law by President Bill Clinton. Many attribute the banking collapse to passing of this legislation

http://goodmenproject.com/good-feed-blog/jp-morgan-chase-loses-2-billion-here-we-go-again/

You are arguing a technicality, which only changes the TIMING of when the repeal happened. It can be argued that the FED started the repeal in 1990 and the TSA finished the job. Not sure what that proves or why I would give a damn, which I don't.

No argument here..Just trying to inform...